Mortgage rates saw a notable increase last Friday, reaching their highest levels since September, driven by rising yields on U.S. Treasury bonds.
The average interest rate on 30-year fixed loans climbed to 6.41%, the highest rate recorded since the first week of September. However, this figure remains lower than the same period last year, when it reached 6.78%.
Mortgage rates show a strong correlation with the yield on 10-year U.S. Treasury bonds, which also rose again at the end of last week, according to Matthew Graham, Chief Operating Officer at Mortgage News Daily. Graham pointed out the connection between financial uncertainty and the flow of investments into bonds as a safe haven.
Despite the increase in interest rates last week, demand for mortgage loans from buyers rose, according to a report from the Mortgage Bankers Association. Still, the renewed rise in rates may cast a negative effect on the spring buying season, which is already facing multiple challenges.
Just two weeks ago, interest rates had declined to their lowest levels in years, briefly reaching 5.99%. However, the gains that buyers achieved at that time quickly evaporated with the current increase. For example, for someone planning to buy a $400,000 home with a 20% down payment and a 30-year fixed loan, the monthly payment is now only $115 higher than it was two weeks ago.
